Two weeks ago I “lost” the opportunity to list two homes for an owner. The number he had and the number I came to via a market analysis had a huge gap. The gap was almost $200k.
Here’s what I learned – sometimes, having access to more data than a home seller is a detriment to helping them establish the right price that’ll sell their home. And the strategies for selling a home fail when the discrepancy in a property’s value is too great.
Here’s the story…
This owner not only built three homes in the same neighborhood, but also invested in repairing parts of the street, underground electricity and some area improvements. Unfortunately, some of these expenses will not come back to him by increasing the price of his homes above market value.
As a matter of fact, he’s already priced out of the market and his strategies for selling will hurt him in the short, and long term.
Strategies for Selling That Are Critical for Success
While touring his properties he said, “…but 6 months ago those comparative 3-4 homes in the neighborhood sold for $420 per square foot without all these improvements.”
Here are some points I brought to his attention:
* 6 months ago was then and that is not today’s market
* The money he spent on improvements may be sunk costs to sell his homes – or, he may never get those funds back
* Since those other properties sold, the median listing price for homes in his area is down 7.4%
* Since those other homes sold, the market went from a sellers market, to a buyers market
*Specifically, the Months of Supply in his neighborhood went from 5.1 to 6.4. Anything above 6 is considered a buyers market
* Since those other homes sold, the average Days On Market went from 51 to 78 days
Finding Strategies for Selling That are Realistic
My detailed analysis of his home’s value came in around $689,000. He needs to sell around $900k.
With all this specific market data, he still wanted me take his listing “at the price I need in order to recoup my costs and make a profit.”
But markets don’t work like that. Markets don’t care what you “have into it.” They care about market value. And as our values were over $200k apart, I declined his offer to list just to “see what happens.”
For me, that’s a one of the strategies for selling that will find a willing and able buyer. That strategy is one for failure. And it won’t serve him, me, or a buyer.
I like to think of the stock market in this scenario. Just because you buy company stock at $20, and it falls due to market forces to $18… doesn’t mean you you will find a buyer at $23 “just because you’re into it for $20 and need to recoup your loss.”
Strategies for selling your home are similar to selling more investments. If the timing is not right, it may be better to hold off until market conditions change and become favorable.
My wish is that the next realtor he interviews will analyze the market data and have similar findings as I did. If not, they publish the listings at over $200k above market. That will be an even harder conversation to have 6 months later when his homes aren’t being shown, nor selling.
That’s six months of valuable, wasted time.
These strategies for selling a home are not grounded on good market fundamentals and do more harm, than good.
(photo above: Your Tropical Lifestyle waits at South End Delray Beach)
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*** I Encourage you see my New Video showing how amazing Delray Beach Is.
*** Or my previous video about Delray Beach falling home prices
*** I love homeowner money-saving tips and thought this New York Times essay would be useful to share
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*** South Florida’s Surging Supply Continues ***
* Last week there were 46,832 units available…
* This morning’s Inventory is 47,221 *
… supply was UP 389 Units
